Answer:
overhead rate: 0.8188
applied overhead: 2,169,820
overapplication: 469,820
Explanation:
<u>predetermined overhead:</u>
We distribute the overhead over the cost driver. In this case labor cost:
1,785,000 / 2,180,000 = 0.8188
each dollar of labor cost generated 0.8188 of overhead.
<u>applied overhead:</u>
actual labor cost x rate:
2,650,000 x 0.8188 =<em> 2,169,820</em>
<em>actual overhead: 1,700,000</em>
overapplication of overhead: 469,820
we capitalize more cost than actual incurred we should decrease our COGS